METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

SECOND PARTY OPINIONMETAWATER CO., LTD.
BLUE FINANCE FRAMEWORK

Prepared by: DNV Business Assurance Japan K.K.
Location: Kobe, Japan
Date: 26 October 2023
Ref. Nr.: PRJN-468540-2022-AST-JPN-01

Page 1 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

CONTENTS
Executive Summary

3

I. Introduction

7

II. Scope and Objectives

15

III. Responsibilities of METAWATER and DNV

17IV. Basis of DNV’s Opinion

18

V. Work Undertaken

21

VI. Findings and DNV's Opinion

22

Schedule-1 Blue Finance Nominated Projects

37

Schedule-2 Blue Finance Guidelines Eligibility Assessment

39

Schedule-3 Bonds to Finance the Sustainable Blue Economy, a Practitioner’s Guide Eligibility Assessment 51
Schedule-4 Green Finance Eligibility Assessment Protocol

61

Revision History
Revision

Date of Issue or

NumberPublication

0

26 October 2023

Main Changes
InitialDisclaimer
Our assessment relies on the premise that the data and information provided by Fundraiser to us as part of our review procedures have been provided in good faith.
Because of the selected nature (sampling) and other inherent limitations of both procedures and systems of internal control, there remains the unavoidable risk that errors
or irregularities, possibly significant, may not have been detected. Because of the selected nature (sampling) and other inherent limitations of both procedures and systems
of internal control, there remains the unavoidable risk that errors or irregularities, possibly significant, may not have been detected. DNV expressly disclaims any liability or
co-responsibility for any DNV expressly disclaims any liability or co-responsibility for any decision a person or an entity may make based on this Statement.

Statement of Competence and Independence
DNV applies its own management standards and compliance policies for quality control, in accordance with ISO/IEC 17021:2011 - Conformity Assessment Requirements forbodies providing audit and certification of management systems, and accordingly maintains a comprehensive system of quality We have complied with the requirements forbodies providing audit and certification of management systems, and accordingly maintains a comprehensive system of quality control, including documented policies andprocedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. We have complied with the DNV Codeof Conduct1 during the assessment and maintain independence where required by relevant ethical requirements. This engagement work was carried out by an independent
team of sustainability assurance professionals. DNV maintains complete impartiality towards stakeholders. DNV maintains complete impartiality towards stakeholders
interviewed during the assessment process.

1 DNV Code of Conduct is available from the DNV website (www. DNV.com).

Page 2 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Executive Summary
METAWATER Co., Ltd. (hereinafter, referred to as “METAWATER”) is engaged in the Plant
Engineering Business, which includes the design and construction of facilities for water
treatment plants and sewage treatment plants in Japan and overseas, and the Service
Solutions Business, which is mainly engaged in the provision of various services such as
repair work and operation and management of facilities for water treatment plants, sewage
treatment plants and waste treatment facilities. Since its establishment as a water andenvironmental business company, the METAWATER Group's strength lies in its value chain,
which comprehensively develops design and construction (EPC) and operation andmaintenance (O&M) and contributes to solving various social issues in the water andenvironmental fields.
METAWATER has developed the Blue Finance Framework (hereinafter, referred to as the“Framework”) to align with its sustainability strategy and to contribute to solving social issues
and helping to create a sustainable society.
The Framework is structured as a comprehensive framework that includes the following
elements required for Blue Finance execution as well as Green Finance:- Blue Finance (blue bonds and blue loans)- Green Finance (green bonds and green loans)
DNV Business Assurance Japan K.K. (hereinafter, referred to as “DNV”), as an external
reviewer, evaluated the eligibility of the Framework.
Specifically, DNV applied frameworks (e.g., principles and guidelines) focusing on thefollowing and provided eligibility assessment to the Framework. Depends on the projecttypes, Blue Finance Guidelines (BFG) released from International Finance Corporation (IFC)
and/or Bonds to Finance the Sustainable Blue Economy (A Practitioner’s Guide) (SEBG)
released by International Capital Market Association (ICMA) will be applied.
- Blue Finance Guidelines (BFG), International Finance Corporation (IFC), 2022.
- Bonds to Finance the Sustainable Blue Economy (A Practitioner’s Guide) (SBEG),
International Capital Market Association (ICMA) and others, 2023.
- Green Bond Principles (GBP), International Capital Market Association (ICMA), 2021.
- Green Bond Guidelines (GBGLs), Ministry of the Environment, 2022.
- Green Loan Principles (GLP), Loan Market Association (LMA) et al, 2023.
- Green Loan Guidelines (GLGLs), Ministry of the Environment, 2022.
A summary of the eligibility assessment results for each of the common elements, aspresented in the above frameworks, is as follows:

Page 3 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion<BFG/SBEG eligibility assessment results>(1) Blue Finance Guideline (BFG)
Table-1 shows METAWATER's Eligibility Criteria and Eligible Projects through its assessmentof METAWATER. DNV has confirmed that the Eligible Projects meet the Green Bond Principles
and Green Loan Principles' Eligible Project Category 'Sustainable water and wastewater
management' and ‘Energy efficiency’, as well as 6 and 14 of the Sustainable Development
Goals (SDGs Sustainable Development Goals), which are necessary requirements for a Blue
Project, and that the activities make a substantial contribution.
DNV has confirmed that METAWATER complies with the environmental laws and regulations
required by the national and local authorities where the project is located and conducts
environmental impact assessments as required when selecting eligible projects. As a result,
DNV has confirmed that there are no risks or significant environmental or social risks that
could affect the progress of other environmental priorities as a result of the implementationof the eligible project. In the event that significant environmental and social risks arise in the
future, METAWATER will respond by applying appropriate safeguards and standards. These
are in line with the requirements of the Blue Project.

Table-1 Eligibility Criteria and Eligible Projects
Eligibility Criteria

Eligible Projects (summary)Relevant SDGs

Concession Projects*1
Investment and financing of water
treatment projects*2 throughspecial purpose companies (SPCs)
to the SPCs concerned.
Sustainable Water
Treatment Business

Investments and Financing
Investments and financing todomestic and foreign companies(excluding SPCs in concession
projects) that specialise in water
treatment or whose operations are
dominated by water treatment
business.

*1: Concession projects: projects in which the right to use a water treatment project or other project istransferred (ownership is held by a public body such as a national or local government).
*2: Water treatment projects: all or any of water supply, industrial water supply and sewerage.

Page 4 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Table-2 shows the Blue Finance Areas (classified as A-I in the BFG) into which the Eligible Criteria
are classified. DNV has confirmed that METAWATER's Eligible Project falls under 'Area A: Water
Supply’, 'Area B: Water Sanitation’, and ‘Area D: Ocean-friendly chemicals and plastic-related
sectors‘. See Schedule-2 for specific details.

Table-2 Blue Finance Areas*2
Blue Finance Areas*1

Eligibility Projects
Concession Projects

Following areas apply depending on the type of
project (water supply, industrial water supply
or sewerage) included in the eligible projects.
[Water supply]: A. Water Supply.

Investments and Financing[Industrial water supply]: A. Water Supply.
[Sewerage]: B. Water Sanitation, D. Oceanfriendly chemicals and plastic-related sectors*1: Areas defined by the BFG eligibility categories A to I are indicated in Blue Finance according toproject characteristics.

(2) Bonds to Finance the Sustainable Blue Economy (A Practitioner’s Guide) (SBEG)DNV has confirmed that METAWATER meets the three pre-issuance requirements (A to C)
stipulated by the SBEG as follows. Please refer to Schedule-3 for details.

A. Creating a Bond Framework to Finance the SBE* (*Sustainable Blue Economy)
DNV has confirmed that METAWATER plans to create and publish a Blue Finance Framework thatsatisfies the Four Principles of GBP.
B.

Define and Confirm Project Categories

DNV has confirmed that among METAWATER's eligible projects, [sewerage projects] falls under 6.
Marine Pollution a. Wastewater Management in the SBEG Blue Project category and subcategory.
Specifically, please refer to Table-1 of Schedule-3, Indicative Blue Project Categories. DNV has also
confirmed that METAWATER has internal processes in place to ensure that eligible projects do not
fall within a list of distance from shore or exclusions.
C.

Obtain an External Review

DNV has confirmed METAWATER to appoint DNV as an external reviewer to assess the complianceof the Blue Finance Framework with the GBP's four principles and to disclose the second party
opinion to key stakeholders.

Page 5 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion<GBP/GLP eligibility assessment results>
Principle One: Use of Proceeds.
DNV has confirmed that METAWATER will use the proceeds raised through blue finance for
eligible projects based on the eligibility criteria set out in Table-1. It was confirmed thatthe proceeds will be used for new investments and refinancing of existing investments
etc., and in the case of refinancing, only for expenditure carried out within approximately
four years of the financing.

Principle Two: Process for Project Evaluation and Selection.
DNV confirmed that the process for the evaluation and selection of the METAWATER
project is that the Corporate Communications Office and Accounting and Financial Planning
Office select candidate projects, and after consultation with the relevant internal
departments, the Head of Accounting and Financial Planning Office makes the final
decision and reports the results to the Board of Directors for approval by the
representative director.

Principle Three: Management of Proceeds.
DNV has confirmed that METAWATER's Accounting and Financial Planning Office will
allocate and manage the proceeds raised under the Framework to Eligible Projects using
an internal management system. An equal amount of the procured proceeds will be used
to fund the repayment of loans and other borrowings raised in the Eligible Projects or in
the implementation of Eligible Projects. In addition, the proceeds will be managed so thatthe total amount of eligible projects will not be less than the amount raised by Blue
Finance.

Principle Four: Reporting.
DNV confirmed that METAWATER will disclose the funding allocation status report andimpact report on an annual basis, e.g., on METAWATER’s website. It was also confirmedthat the first disclosure is expected to be made within one year of the Blue Financefunding. DNV also confirmed that if there are any major changes to the plan for allocating
the proceeds raised, or if there are any changes in circumstances that have a major
impact on the plan after the proceeds have been allocated, METAWATER will disclose
these in a timely manner.

DNV has confirmed from the Framework and other relevant documents and information
provided by METAWATER that the Blue Finance is expected to meet the requirements of theBlue Project as required by the BFG and/or SBEG and also to meet the requirements of thefour core elements set out in the GBP, GLP, etc., and to be properly planned andimplemented.

Page 6 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

I. Introductioni.

About the Fundraiser
METAWATER Co., Ltd. was established on 1 April 2008 as a general engineering
company in the water and environmental sector through the merger of the water andenvironmental business subsidiaries of NGK Insulators, Ltd. and Fuji Electric Co., Ltd.
Since its establishment, the METAWATER Group has developed its business in the fields
of water supply, sewerage and the environment both in Japan and abroad as a corporategroup that has a combination of the mechanical technology from NGK Insulators and theelectrical technology from Fuji Electric, contributing to the realisation of sustainable waterand environmental infrastructure through its corporate mission that “We will continue tocontribute to the realization of a sustainable environment and society by solving waterand environmental issues” which is based on its corporate philosophy of “Continue, tomake it sustainable.” It also actively promotes cooperation and alliances with domestic
and foreign companies and focuses on providing a wide range of solutions tailored tocustomer needs.
Since its establishment as a water and environmental business company in 2008, the
METAWATER Group's strength lies in its value chain, which comprehensively develops
design and construction (EPC) and operation and maintenance (O&M), and contributes tosolving various social issues in the water and environmental sectors. The METAWATER
Group contributes to solving various social issues in the water and environmental fields.
- Plant engineering business: design and construction of facilities for water treatment
plants and sewage treatment plants in Japan and abroad.
- Service solutions business: repair work and operation and management of facilities
for water treatment plants, sewage treatment plants and waste treatment facilities.

Page 7 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

ii. Fundraiser’s Initiatives for ESG
METAWATER strives to realise sustainable environment and society through its business, by
positioning its group philosophy of “Continue, to make it sustainable” as itself as a basic
sustainability policy in order to connecting to raising its corporate value.

Basic Sustainability Policy“The METAWATER Group aims to be a company that meets the expectations of its
stakeholders, is trusted by society and continues to contribute to society, in order tosupport our everyday safe and secure lives, contribute to environmental and social
sustainability and achieve sustainable development together with society. Towards thisrealisation, we will continue with the following initiatives."The company will work with customers, communities, and partners to contribute tosolving environmental and social issues with the most appropriate technologies andservices.
People are our greatest asset, and we are committed to recognising diversity,
building diverse ways of working and creating a safe and secure working
environment.
We aim to achieve the best possible corporate governance and to become asustainable company together with society in order to increase our corporate value
over the medium and long term.

In order to realise its basic policy on sustainability, the METAWATER Group has
positioned issues that are closely related to the METAWATER Group's business andimportant to society and stakeholders as materiality. METAWATER's materiality, policies,
targets and related SDGs are listed in Table-3. In addition, METAWATER’s businessmodel and its relationship with ESG and SDGs is shown in Figure-1.

Page 8 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Table-3 METAWATER Group Sustainability Promotion Activities– initiative targeting important issues (materialities)＊ The link to the SDGs is complementary when issuing green finance, referring to Green, Social andSustainability Bonds: A High-Level Mapping to the Sustainable Development Goals published by
ICMA, which defines the green bond principles. It is complementary when issuing finance and is
not directly associated with the financing objective.

Figure-1: METAWATER’s Business Model

Page 9 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Among METAWATER's key issues (materiality) that are closely related to the Blue Projectare:~ Water environment ~The company contributes to ensuring safe water quality and the recycling andconservation of the water environment by providing optimal technologies and services
in the construction, maintenance and operation of water supply and seweragefacilities, which are essential lifelines for people's lives.


Contribution to sustainable water and wastewater facilities

Contributing to the water environment abroadConservation of water source forests~ Circular society ~To continue to protect our rich natural environment, the company makes effective useof limited resources and contributes to the creation of a recycling-oriented society.
Contribution to sustainable recycling facilities



Promoting the reduction and re-use of industrial wasteReduction of environmental impact~ Reduction of greenhouse gas emissions ~Through its business activities, the Company will contribute to reducing greenhousegas (GHG) emissions in response to issues such as rising sea levels and abnormal
weather caused by global warming.


GHG emission reductions in water and wastewater facilities



Reduction of supply chain emissions (CO2)Page 10 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

iii Fundraiser’s Environmental Policy
With the following environmental policy and targets, METAWATER is committed tocontinuing to reduce its environmental impact by introducing environmentally friendly
products to the market and promoting development with particular attention to global
warming and other issues.

<Basic Policy>
METAWATER will continue to contribute to the realisation of a sustainable society throughtheir business and efforts to reduce environmental impact and contribute to local
communities to sustain water and environmental infrastructure.
<Target>

Reducing the environmental impact of corporate activities



Active participation in social and community contribution activities



Activities to prevent environmental accidents and pollutionCompliance with environmental laws and other requirements

Continuous provision of products and services that contribute to reducing
environmental impact

Page 11 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

iv Fundraiser’s Initiatives for SDGs
Through the assessment, DNV has confirmed that the
METAWATER Group is committed to the following SDGs.
These initiatives are linked to the implementation of blue
projects and blue financing.
The METAWATER Group believes that all 17 goals of theSDGs are important for global sustainability. In particular,
in consideration of the business characteristics and social
mission of the METAWATER Group, the METAWATER
group have started working in the priority areas ofrealising goals 6: Clean Water and Sanitation, 11:
Sustainable Cities and Communities, and 17: Partnerships
for the Goals. As a water and environment businesscompany, the METAWATER Group takes particularly
seriously the fact that target number 6, 'Clean Water andSanitation', in which clearly states 'for all'.
Japan's water supply penetration rate is
97.9% (end of 2016) and the sewage
treatment population penetration rate ishigh at 90.9% (end of 2017).
However, 2.1 billion people worldwide(about 3 in 10 of the world's population)
do not have access to safe water athome and 4.5 billion people (6 in 10 of
the same population) do not have access to a safe, controlled toilet.
In line with improvements in the water environment overseas, Japan's water supply andsewerage systems, which have achieved rapid economic growth, are also facing various
problems, such as ageing facilities and equipment.
The METAWATER Group aims to ensure access to safe water and toilets for 'everyone'
and to create a comfortable and secure 'liveable community' for all.
This initiative cannot be achieved by METAWATER alone. It can only be achieved through'partnerships' with partner companies, citizens, local authorities, and local businesses.
The METAWATER Group aims to be a company that continues to develop together withlocal communities and society towards the sustainability of water and environmental
infrastructure, with the achievement of these three goals at its heart.

Page 12 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

v. Fundraiser's Efforts to Reduce Greenhouse Gas Emissions
METAWATER is working to achieve its goals by developing technologies that respond toclimate change and environment, based on the trends of the government's and local
authorities' (customers). In addition, METAWATER is working to solve problems bycontributing the reduction of greenhouse gas emissions and energy conservation fromthe perspective of the entire plant facility, such as water treatment technology andthermal operation technology.
As efforts toward carbon neutrality, METAWATER has set the goal of reducing GHG
emissions (Scope 1 and 2) by 70% in 2030 (compared to 2020) and achieving net zeroin 2050. This exceeds the CO2 reduction rate of 46% (compared to FY 2013).
Additionally, as part of their contribution to reducing GHG emissions for their customers(local governments), they aim to reduce GHG emissions by 50% by 2030 through theintroduction of products and systems. Please refer to Figure-3 for detailed shift in CO2
reduction amount and rate.

Figure-2 Indicators and targets for GHG emissions in the METAWATER group

Figure-3 GHG reductions and rates of thermal manipulation-related product and systems at
METAWATER’s existing facilities

Page 13 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

vi.

About the Blue Finance Framework
After developing the Framework, METAWATER plans to raise proceeds through blue
finance based on the Framework. Blue Finance is in line with METAWATER's
sustainability strategy and will contribute to solving the relevant SDGs and social
issues, thereby contributing to the realisation of a sustainable society.

Name of Fundraiser: METAWATER Co., Ltd.
Framework name: METAWATER Co., Ltd. Blue Finance Framework
Name of external review organisation: DNV Business Assurance Japan K.K.
Date of report: 26 October 2023

Page 14 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

II. Scope and Objectives
METAWATER has commissioned DNV to conduct a pre-issuance assessment of the"METAWATER Blue Finance Framework". The objective of the pre-issuance assessment of
DNV is to conduct an assessment to confirm that METAWATER’s Blue Finance Framework
meets the criteria such as BFG, SBEG, GBP, GBGLs, GLP, GLGLs, related technical standardsof CBS, which will be described later, and other related standards or guidelines (see the tablebelow), and to provide a second party opinion on the eligibility of this Blue Finance
Framework.
DNV, as an independent external reviewer, has identified no real or perceived conflict ofinterest associated with the delivery of this second-party opinion for METAWATER.
In this paper, no assurance is provided regarding the financial performance of the financing,the value of any investment, or the long-term environmental benefits of the transaction.

(1) Scope of review
The review assessed the following items and confirmed their alignment with the main objectives of the fourmain elements of the GBP/GLP☒

Use of Proceeds☒

Process for Project Evaluation and Selection☒

Management of Proceeds☒

Reporting(2) Role(s) of review provider☒

Second Party Opinion☐

Certification☐

Verification☐

Rating☐Other (Please Specify):(3) Standards/guidelines to be applied
No.

Standards or guidelines

Publisher

Application level*1*2

1.

Blue Finance Guidelines (BFG)

International Finance Corporation (IFC),
2022.

Apply

International Capital Market Association(ICMA) and others, 2023.

Apply

2.

Bonds to Sustainable Blue Economy(A Practitioner’s Guide) (SBEG)

3.

Green Bond Principles (GBP)

International Capital Market Association(ICMA), 2021.

Apply

4.

Green Bond Guidelines (GBGLs)

Ministry of the Environment, 2022.

Apply

5.

Green Loan Principles (GLP)

Loan Market Association (LMA) andothers, 2023.

Apply

6.

Green Loan Guidelines (GLGLs)

Ministry of the Environment, 2022.

Apply

7.

Climate Bond Standard Version 3.0(Sector Technical Standard).

Climate Bonds Initiative, 2019.

Refer(Applicable technicalcriteria)

Page 15 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion*1 Apply: For Blue Finance, assessed eligibility for three elements written in the guideline. For Green
Finance, assessed eligibility for all four core elements common to each principle or guideline*2 Refer: Based on the project and implementation plans of this Blue Finance, the relevant contents werepartially considered.
*3: BFG and/or SBEG will be applied based on the types of the project.

Page 16 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

III. Responsibilities of METAWATER and DNVMETAWATER has provided the information and data used by DNV during the delivery of thisreview. Our statement represents an independent opinion and is intended to inform
METAWATER and other interested stakeholders in the finance as to whether the establishedcriteria have been met, based on the information provided to us. In our work, we have reliedon the information and the facts presented to us by METAWATER. DNV is not responsible forany aspect of the projects or assets referred to in this opinion and cannot be held liable if
estimates, findings, opinions, or conclusions are incorrect. Thus, DNV shall not be held liable
if any of the information or data provided by METAWATER and used as a basis for thisassessment were not correct or complete.

Page 17 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

IV. Basis of DNV’s Opinion
To provide as much flexibility as possible for METAWATER, DNV has adapted blue and green
finance assessment methodologies, which incorporate the requirements of BFG, SBEG, GBP,
GBGLs, GLP and GLGLs, to create METAWATER specific Blue Finance Eligibility Assessment
Protocol (hereinafter “DNV’s Protocol”). Please refer to Schedule-2 and Schedule-3. The
Protocol is applicable to the Blue Finance under the BFG, SBEG, GBP, GBGLs, GLP and
GLGLs.

The assessment under this Protocol allows DNV to provide a second party opinion as anindependent external review body.
The DNV Protocol contains a set of suitable criteria that can be used to underpin DNV'sopinion. The overarching principles behind Blue and Green Finance that form the basis forthe expression of opinion are as follows:Blue Finance'This includes financing eligible activities that address sustainable water management or
marine protection (SDGs 6 and 14 respectively)'‘This promotes the sustainable use of maritime resources and related sustainable economic
activities’
Green Finance'Enables capital to be raised and invested in new or existing projects that provide
environmental benefits'
As per our Protocol, the criteria against the Finance have been revied are grouped under thefour Principles, respectively, as indicated by BFG, SBEG, GBP, GBLGLs, GLP and GLGLs.

(1) Elements of the BFG (Identification of Blue Finance Eligible Activities)
Is the project type consistent with the Green Bond Principles’ and Green Loan
Principles’ eligible project categories and does it make a substantial contribution to
Sustainable Development Goals 6 or 14 beyond compliance with applicable laws
and regulations?
In order to qualify as a blue project, a project must be consistent with the project
categories of Green Bond Principles and Green Loan Principles and contribute to either
Sustainable Development Goal 6 or 14 with outputs and outcomes directly related to one
or more of the target indicators of Sustainable Development Goals.

Page 18 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Does the project type introduce risk that may affect progress on otherenvironmental priorities, such as Sustainable Development Goals 2, 7, 12, 13 and
15?
The project can only be labelled blue if it does not introduce material risk to other themes
and priority environmental areas of the Sustainable Development Goals themes,
including:
2: Zero Hunger.
7: Affordable and Clean Energy
12: Responsible Consumption
and Production
13: Climate Action
15: Life on Land

Are Environmental, Social, and Governance (ESG) safeguards and standards, suchas the IFC Performance Standards, applied in the implementation of the project if
there are material environmental and social risks?
The project must clearly state which internationally accepted sustainability standards it isfollowing. IFC Performance Standards and the World Bank Environmental, Health, andSafety guidelines, or similar, are expected to be followed. In addition, industry specificsustainability standards, as well as certain specific product standards, may also be applied
for a blue investment above national requirements.

Page 19 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion(2) SBEG’s three pre-issuance requirements⚫

Creating a Bond Framework to Finance the SBE: A bond framework is the basis
for sustainable bond issuance. A framework is a publicly available document thatoutlines how issuers align their "blue bonds" with the four elements set out in the
GBP.

⚫

Define and Confirm Project Categories: Eligible blue projects can coverinvestments and other related expenditures, support expenditures, and the financing
and refinancing of physical and financial assets, including bank loan portfolios. Issuers
can refer to a non-exhaustive list of eligible project categories under the GBP. SBEG
provides additional guidance regarding eligible blue project categories.

⚫

Obtain an External Review: Issuer is encouraged to appoint an external reviewer toassess whether their Green (Blue) Bond or Green (Blue) Bond Programs orframeworks comply with the GBP's four elements through a pre-issuance external
review. There are multiple types of external reviews, but the most common approachis to seek a second party opinion (SPO) on the bond framework and publish it on theissuer's website.

(3) 4 common elements of GBP, GBGLs, GLP and GLGLs⚫ Principle One: Use of Proceeds. The Use of Proceeds criteria are guided by therequirement that a fundraiser of a green bond must use the funds raised to financeeligible activities. The eligible activities should produce clear environmental benefits.
⚫ Principle Two: Process for Project Evaluation and Selection. The ProjectEvaluation and Selection criteria are guided by the requirements that a fundraiser of agreen bond should outline the process it follows when determining eligibility of aninvestment using Green Bond proceeds and outline any impact objectives it willconsider.
⚫ Principle Three: Management of Proceeds. The Management of Proceeds criteria
are guided by the requirements that a green bond should be tracked within theissuing organization, that separate portfolios should be created when necessary andthat a declaration of how unallocated funds will be handled should be made.
⚫ Principle Four: Reporting. The Reporting criteria are guided by the recommendationthat at least annual reporting to the bond investors should be made of the use ofbond proceeds and that quantitative and/or qualitative performance indicators should
be used, where feasible.

Page 20 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

V. Work Undertaken
Our work constituted a high-level review of the available information, based on theunderstanding that this information was provided to us by METAWATER in good faith. We
have not performed an audit or other tests to check the veracity of the information provided
to us. The work undertaken to form our opinion included:i. Blue Finance Framework Assessment⚫ Creation of an METAWATER specific Protocol, adapted to the purpose of the Blue
Finance, as described above and in Schedule-2 and 3 to this Assessment.
⚫ Assessment of documentary evidence provided by METAWATER on the Bond andsupplemented by a high-level desktop research. These checks refer to current
assessment best practices and standards methodology.
⚫ Discussions with METAWATER’s management, and review of relevant documentationand evidence related to the criteria of the Protocol.
⚫ Documentation of findings against each element of the criteria.

ii. Periodic Reviews (*not included in this report)⚫ Assessment of evidence provided by METAWATER after issuance of the Blue Finance,and supplemental assessment by desk review from higher perspective⚫ Interviews with METAWATER’s managers and review of relevant documentation⚫ Field research and inspections (if required)⚫ Review of the nominated projects and assets at the time of a post-issuance
verification (updated as set out in Schedule-1)⚫

Document creation of post-issuance assessment result.

Page 21 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

VI. Findings and DNV's Opinion
DNV’s findings and opinions are listed below:(1) presents the findings and DNV's opinion on the BFG elements. See Schedule-2 for details.
(2) presents the findings and DNV's opinion regarding SBEG's three pre-issuancerequirements. Please refer to Schedule-3 for details.
(3) as GBP/GLP-1~4 presents findings and DNV’s opinions on four common elements of GBP,
GBGLs, GLPs and GLGLs. See Schedule-4 for details.

(1) Findings and DNV’s opinions on BFG elements
BFG-1: Is the project type consistent with the Green Bond Principles’ and Green Loan
Principles’ eligible project categories and does it make a substantial contribution to
Sustainable Development Goals 6 or 14 beyond compliance with applicable laws andregulations?
In domestic water treatment projects, there is an urgent need to address the financial
difficulties of project partners responsible for project operations against a backdrop of adeclining population, a shortage of engineers, the ageing of facilities and equipment
developed during the period of rapid economic growth, major earthquakes and sudden
downpours. One of the expected solutions is public-private partnerships, in which private
sector proceeds, technology and know-how are utilised for the development of public
infrastructure. Public-private partnership projects have been increasing since the PFI Act
came into force in 1999. Furthermore, due to the 2018 amendments to the Water Supply
Law, concessions and other private sector outsourcing of business operations are attracting
attention, and METAWATER has listed concession projects as an eligibility criterion.
Table-1 lists METAWATER's eligibility criteria and eligible projects.
Through its assessment of METAWATER, DNV has confirmed that the eligible project
meets the 'Sustainable water and wastewater management' category and ‘Energy
efficiency’ of eligible projects under the Green Bond Principles and the Green Loan
Principles, as well as makes a substantial contribution to Sustainable Development
Goals (SDGs) 6 and 14, which is a necessary requirement for a Blue Project.

Page 22 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Table-1 (reiterated) Eligibility Criteria and Eligible Projects
Eligibility Criteria

Eligible Projects (summary)Relevant SDGs

Concession Projects*1
Investment and financing of water
treatment projects*2 throughspecial purpose companies (SPCs)
to the SPCs concerned.
Sustainable Water
Treatment Business

Investments and Financing
Investments and financing todomestic and foreign companies(excluding SPCs in concession
projects) that specialise in water
treatment or whose operations are
dominated by water treatment
business.

*1: Concession projects: projects in which the right to use a water treatment project or otherproject is transferred (ownership is held by a public body such as a national or local government).
*2: Water treatment projects: all or any of water supply, industrial water supply and sewerage.

Page 23 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

DNV has confirmed that METAWATER's eligible projects make a substantial contribution toSDG 6 and SDG 14. Specifically, the following items (targets) shown in Table-4.

Table-4 Targets of SDG 6 and SDG 14 to which METAWATER's eligible projects will contribute
SDGs

6. Clean Waterand Sanitation

14. Life Below
Water

Target6.1

By 2030, achieve universal and equitable access to safe and affordable drinking
water for all

6.2

By 2030, achieve access to adequate and equitable sanitation and hygiene for all
and end open defecation, paying special attention to the needs of women and girls
and those in vulnerable situations

6.3

By 2030, improve water quality by reducing pollution, eliminating dumping andminimizing release of hazardous chemicals and materials, halving the proportion of
untreated wastewater and substantially increasing recycling and safe reuse globally

6.4

By 2030, substantially increase water-use efficiency across all sectors and ensuresustainable withdrawals and supply of freshwater to address water scarcity andsubstantially reduce the number of people suffering from water scarcity

6.5

By 2030, implement integrated water resources management at all levels, including
through transboundary cooperation as appropriate

6.6

By 2020, protect and restore water-related ecosystems, including mountains,forests, wetlands, rivers, aquifers and lakes

6.a

By 2030, expand international cooperation and capacity-building support todeveloping countries in water- and sanitation-related activities and programmes,
including water harvesting, desalination, water efficiency, wastewater treatment,
recycling and reuse technologies

6.bSupport and strengthen the participation of local communities in improving waterand sanitation management

14.1

By 2025, prevent and significantly reduce marine pollution of all kinds, in particularfrom land-based activities, including marine debris and nutrient pollution

14.3

Minimize and address the impacts of ocean acidification, including throughenhanced scientific cooperation at all levels

Page 24 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

BFG-2: Does the project type introduce risk that may affect progress on otherenvironmental priorities, such as Sustainable Development Goals 2, 7, 12, 13 and 15?
DNV has confirmed that METAWATER has complied with the environmental laws andregulations required by the national and local authorities where the project is located inselecting eligible projects, and has conducted environmental impact studies where necessary.
At present, no risks have been identified that could affect the progress of otherenvironmental priorities.

BFG-3: Are Environmental, Social, and Governance (ESG) safeguards and standards,
such as the IFC Performance Standards, applied in the implementation of the project
if there are material environmental and social risks?
DNV has confirmed that METAWATER has not identified any significant environmental orsocial risks at this time. DNV has also confirmed that in the event of significant
environmental and social risks developing in the future, METAWATER will respond by
applying appropriate safeguards and standards.
DNV checked which areas of blue finance METAWATER's eligible projects fell under.
Table-2 (reiterated) shows the Blue Finance Areas (classified as A to I in the BFG) into
which the Eligible Criteria are classified, DNV has confirmed that METAWATER's Eligible
Project falls under 'Area A: Water Supply’, 'Area B: Water Sanitation’, and ‘Area D: Oceanfriendly chemicals and plastic-related sectors’. See Schedule-2 for specific details.

Table-2 (reiterated) Blue Finance Area*2
Eligibility Criteria
Concession projects

Blue Finance Area
Following areas apply depending on the type of
project (water supply, industrial water supply
or sewerage) included in the eligible projects[Water supply]: A. Water Supply.

Investments and Financing[Industrial water supply]: A. Water Supply.
[Sewerage]: B. Water Sanitation, D. Oceanfriendly chemicals and plastic-related sectors .

*1: Areas defined by the BFG eligibility categories A to I are indicated in Blue Finance according
to project characteristics.

Page 25 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion(2) Findings and DNV’s opinion on SBEG’s three pre-issuance requirements
DNV has confirmed that METAWATER meets the three pre-issuance requirements (A to C)
stipulated by the SBEG as follows. Please refer to Schedule-3 for details.

A. Creating a Bond Framework to Finance the SBE
DNV has confirmed that METAWATER plans to create and publish a blue financeframework that satisfies the following four elements of GBP. Findings on the four
elements of GBP are described in VI. Findings and DNV's Opinion of this report (3)Findings and DNV’s opinions on four common elements of GBP, GBGLs and GLP,
GLGLs.
(i) Use of Proceeds(ii) Process for Project Evaluation and Selection(iii) Management of Proceeds(iv) Reporting

B. Define and Confirm Project Categories
DNV has confirmed that among METAWATER's eligible projects, [sewerage projects] falls
under 6. Marine Pollution a. Wastewater Management in the SBEG Blue Project category
and subcategory. Specifically, please refer to Table-1 of Schedule-3, Indicative Blue
Project Categories DNV has also confirmed that METAWATER has internal processes inplace to ensure that eligible projects do not fall within a list of distance from shore or
exclusions.

C. Obtaining an external review
DNV has confirmed METAWATER plans to appoint DNV as an external reviewer to assess
the compliance of the Blue Finance Framework with the GBP's four elements and to
disclose the second party opinion to key stakeholders. A summary of the external review
findings is provided in this report.

Note that SBEG stipulates three items as post-issuance requirements; D. Management ofProceeds, E. Allocation and Impact Reporting, and F. Obtain an External Review, but these
are not included in this report.

Page 26 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion(3) Findings and DNV’s opinions on four common elements of GBP, GBGLs and GLP,
GLGLs
GBP/GLP-1: Use of Proceeds
The eligible projects that meet BFG and/or SBEG for which METAWATER will use theproceeds are listed in Table-1 and fall under 'Sustainable water and wastewater
management' and ‘Energy efficiency’ as defined in the Green Bond Principles and theGreen Loan Principles. DNV has confirmed that METAWATER will use the proceeds for
new investments in eligible projects and for refinancing etc. for existing refinancing ofinvestments and, in the case of refinancing etc., only for expenditure undertaken withinapproximately four years of the execution of the blue finance after discussing andevaluating the characteristics of the project and the necessity of refinancing throughinternal process.

Table-1 (reiterated) Eligibility Criteria and Eligible Projects
Eligibility Criteria

Eligible Projects (summary)Relevant SDGs

Concession Projects*1
Investment and financing of water
treatment projects*2 throughspecial purpose companies (SPCs)
to the SPCs concerned.
Sustainable Water
Treatment Business

Investments and Financing
Investments and financing todomestic and foreign companies(excluding SPCs in concession
projects) that specialise in water
treatment or whose operations are
dominated by water treatment
business.

*1: Concession projects: projects in which the right to use a water treatment project or otherproject is transferred (ownership is held by a public body such as a national or local government).
*2: Water treatment projects: all or any of water supply, industrial water supply and sewerage.

Page 27 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Use of Proceeds categories under GBP/GLP☐

Renewable energy☒

Energy efficiency☐

Pollution prevention and control☐

Environmentally sustainable management of living
natural resources and land use☐

Terrestrial and aquatic biodiversity☐

Clean transportation☐

Climate change adaptation☐

Green buildings

conservation☒

Sustainable water and wastewater
management☐

Circular economy adapted products,
production technologies and processes☐

Other (please specify):☐

It is undecided at the time of bond issuance, but is expected to be line with the GBP classificationor other eligible areas not listed in the GBP at this time.

Page 28 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

GBP/GLP-2: Process for Project Evaluation and Selection
DNV confirmed that METAWATER has established a process for the evaluation andselection of eligible projects that meet BFG and/or SBEG requirements. Specifically,
Corporate Communications Office and Accounting and Financial Planning Office select thecandidates, and after the consultation with the relevant internal departments, the Headof Accounting and Financial Planning Office makes the final decision and reports theresults to the Board of Directors for approval by the Representative Director.
DNV also confirmed that METAWATER has taken into account potentially negativeenvironmental and social impacts and confirmed mitigative actions shall be applied.

Risks may result in negative impacts
Risk associated with water quality
management

Mitigative Actions➢ Compliance with water quality standards andeffluent standards➢ Installation of water quality sensors,development of corresponding manuals, andstrengthening of water quality managementfrom both software and hardware aspects

Risks related to water resource
conservation➢ Suppression of water source conversion by
improving services for users➢ Environmentally friendly material procurement,
response to environmentally hazardous
substances, compliance with environmental
laws and regulations required by national andlocal governments where waste management
projects are located, and implementation ofenvironmental impact surveys as necessary

Risk of negative environmental impacts
other than water➢ Reduce the amount of industrial waste
generated by reducing the volume of purified
water soil and sewage sludge and making
effective use of it➢ Implementation of sufficient explanations tolocal residents when implementing the project

Page 29 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Risks related to labor safety➢ Implementation of consideration for humanrights➢ Thorough health and safety management andsafety education for employees andcontractors to prevent occupational accidents

Evaluation and Selection☒

Conforms to the fundraiser’s achievement☒of environmental contribution goals☒

Documented process to determine that projects
fit within defined categories

The project is eligible for use of proceeds☒

by green bond and transparency isDocumented process to identify and manage
potential ESG risks associated with the project

ensured.
☒The project is evaluated and selected based☐

Other (please specify):

on the published standard summary

Information on Responsibilities and Accountability☒

Evaluation / Selection criteria subject to☒In-house assessment

external advice or verification☐

Other (please specify):

Page 30 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

GBP/GLP-3: Management of Proceeds
DNV confirmed how METAWATER will track and manage the proceeds between theexecution of the financing and the redemption/repayment. Specifically, DNV confirmedthat METAWATER's Accounting and Financial Planning Office will use an internalmanagement system to allocate and manage the proceeds raised under the framework
to eligible projects.
In addition, the proceeds will be managed so that the total amount of eligible projects
will not be less than the amount raised by Blue Finance. Until the proceeds are allocatedto eligible Projects, the unallocated proceeds will be managed in cash and cash
equivalents.
DNV further confirmed that if it became clear that unallocated proceeds would arise forreasons other than delays in the timing of allocation to eligible projects, other projects
meeting the eligibility criteria that meets BFG and/or SBEG would be selected andproceeds allocated in accordance with the project evaluation and selection process.

Tracking of Proceeds:☒

Some or all of the proceeds by green bonds that are planned to be allocated are systematicallydistinguished or tracked by the fundraiser.

☐

Disclosure of intended types of temporary investment instruments for unallocated proceeds☒

Other (please specify): unallocated proceeds are managed in cash or cash equivalents

Additional disclosure:
Allocated to new investments only☒☒

Allocation to individual disbursements☐

Allocation to a portfolio of disbursements☐

Disclosure of portfolio balance of☐

Other (specify):☐

Allocations to both existing and future
investments

unallocated proceeds

Page 31 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

GBP/GLP-4: Reporting
DNV has confirmed that METAWATER will disclose its fund allocation status report andimpact report on an annual basis on METAWATER's website and elsewhere, and that thefirst disclosure will be made within one year of the Blue Financing fundraising. DNV also
confirmed that METAWATER intends to disclose in a timely manner any major changes
to its plans for the application of the proceeds raised, or any changes in circumstancesthat have a significant impact on its plans after the application of the proceeds raised.

DNV has confirmed that METAWATER intends to disclose the following items relating to
the allocation of proceeds from the Blue Finance until the proceeds raised have been
fully allocated to eligible projects.
•

Amount raised•

Allocation amount•

Balance of unallocated proceeds and method of investment•

Estimated amount or proportion of the portion of proceeds raised used forrefinancing etc.

Page 32 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

DNV has confirmed that, from the time of funding through blue finance until
reimbursement, METAWATER intends to disclose, to the extent practicable, any or all of
the following environmental and social benefits of eligible projects.
Eligible projects
Concession Projects
Investment and financing ofwater treatment projects
through special purpose
companies (SPCs) to the
SPCs concerned.

Reporting Items[General (water supply, industrial water supply,
sewerage)]-

Investments and Financing
Investments and financing todomestic and foreigncompanies (excluding SPCs
in concession projects) thatspecialise in water treatment
or whose operations are
dominated by water
treatment business.

Business overview, Various water treatment
capacity
Equipment renewal, operation status
Securing safe and secure water through strictwater quality control
Strengthen monitoring and streamline
operation management through integrated
business management
Efficient and timely renovation and repair offacilities through active introduction of ICT
systems
Electricity usage savings
Effective use of unused energy- Overview of the investee and the purpose of
the investment or loan.
- Overview of technologies of investee and thestatus of technology introduction, etc.

Page 33 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Use of Proceeds reporting:☒

Project-by-project☒

On a project portfolio basis☐

Linkage to individual bond(s)☐Other (please specify):

Information reported:☒☐

Allocated amounts

Percentage of refinanced share of total
investment of Blue Finance☐

Other (please specify):

Frequency:☒

Annual☐Other (please specify):☐

semi-annual

Impact Reporting (Environmental Benefits):☐

Project-by-project☐

On a project portfolio basis☐

Linkage to individual bond(s)☐Other (please specify):

Frequency:☒

annual☐Other ESG indicators (please specify):☐

semi-annual☐

Energy savings

Information reported (expected or ex-post):☐

GHG emissions/reductions☒

Other ESG assessment items

Business overview, Various water treatment capacity,(specify):

Equipment renewal, Operation status

Means of Disclosure☐

In financial reports.

☐

In the sustainability report.

☐

Included in the extraordinary report.

☒

Other (specify): website☐

In the reviewed report (in this case, specifically mentioning the reportable items that were thesubject of the external review):

Page 34 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Assessment Conclusion
On the basis of the information provided by METAWATER and the work undertaken, it is
DNV’s opinion that the METAWATER Blue Finance Framework meets the criteria establishedin the Protocol, and that it is aligned with the following stated definition or purpose of Blue
Finance and Green Finance for bonds and loans that specify the use of proceeds within the
BFG, SBEG, GBP, GBGLs, GLP and GLGLs.
Blue Finance'This includes financing eligible activities that address sustainable water management
or marine protection (SDG 6 and 14 respectively)'‘This promotes the sustainable use of maritime resources and related sustainableeconomic activities’
Green Finance'Enables capital to be raised and invested in new or existing projects that provide
environmental benefits'

DNV Business Assurance Japan K.K.
26 October 2023

Thomas Leonard

Naoki Maeda

Head of Section, Sustainability Services

Managing Director

Supply Chain & Product Assurance

DNV Business Assurance Japan K.K.

DNV Australia, New Zealand & Southeast Asia

Masato Kanedome

Jun Chokai

Project Leader

Assessor

DNV Business Assurance Japan K.K.

DNV Business Assurance Japan K.K.

Page 35 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion
About DNV
Driven by our purpose of safeguarding life, property and the environment, DNV enables organisations to advance thesafety and sustainability of their business. Combining leading technical and operational expertise, risk methodology andin-depth industry knowledge, we empower our We continuously invest in research and collaborative innovation to provide
We continuously invest in research and collaborative innovation to provide customers and society with operational andtechnological foresight.
With our origins stretching back to 1864, our reach today is global. operating in more than 100 countries, our 16,000
professionals are dedicated to helping customers make the world safer, smarter and greener.
Disclaimer
Responsibilities of the Management of the Fundraiser and the Second-Party Opinion Providers, DNV : The management ofFundraiser has provided the information and Our statement represents an independent opinion and is intended to informthe Fundraiser management and Our statement represents an independent opinion and is intended to inform theFundraiser management and other interested stakeholders in the Bond as to whether the established criteria have beenmet, based on the information provided to us. In our work we have relied on the information and the facts presented to
us by the Fundraiser. Thus, DNV shall not be held liable if any of the information or data provided by the Fundraiser isincorrect. Thus, the DNV shall not be held liable if any of the information or data provided by the Fundraiser's
management and used as a basis for this assessment were not correct or complete.

Page 36 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Schedule-1 Blue Finance Nominated Projects
The example representative projects listed in the Project Summary column in the table are several potential blue projects that have alreadybeen assessed for eligibility at the time of the blue finance evaluation (as of November 2022). Future blue finance executions under the
Framework may include additional projects in addition to the representative uses of proceeds (projects that have already been assessed for
eligibility) listed in the table, which will be assessed by the financier in advance for meeting the eligibility criteria and, if necessary, will beassessed by DNV in a timely manner.
Eligibility

Eligible Projects (summary)

Typical use of proceeds (examples)

Criteria

SDGs
Miyagi Prefecture Public-Private Partnership Operation
Project for the Integration of Water and Waterworks.
- The first project in Japan to integrate the management andoperation of water supply, industrial water supply andConcession Projects*1

Sustainable
Water Treatment
Business

Relevant

Investment in and financing of water
treatment projects*2

through special

sewerage on a long-term basis, with integrated managementof nine projects in Miyagi Prefecture.
- Project by the special purpose company 'Mizumusubi
Management Miyabi Corporation'.

purpose companies (SPCs) to the SPCs

Ariake and Yatsushiro Industrial Water Supply Operation

concerned.

Project, Kumamoto Prefecture, Japan.
- The first concession in Japan to integrate three projects:
water supply, industrial water supply and sewerage.
- Total water supply capacity: approx. 60,000 m3/day; watersupply offices: 38 places; total pipe length: approx. 30 km(including intake, conduit and transmission).

Page 37 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Investments in and financing to overseas subsidiaries
USA: Wigen Companies, Inc.
- Development/design/manufacture of water treatment
equipment, including membrane treatment and ion exchange.
Investments and Financing
Investments and financing to domestic
and foreign companies (excluding SPCs
in concession projects) that specialise inwater treatment or whose operations
are dominated by water treatment
business.

USA：Aqua-Aerobic Systems, Inc.
- Planning, design, construction and maintenance of sewage
and wastewater treatment plant facilities.
Netherlands: RWB Water, B.V.
- Engineering and services related to water and wastewater
treatment, etc.
Germany: Fuchs Enprotec GmbH- Development/design/manufacture of diffusers and agitators
for wastewater treatment.
Switzerland：Mecana Umwelttechnik Gmbh
- Development, design, manufacture and maintenance of water
treatment equipment for water supply and sewerage.

*1: Concession projects: projects in which the right to use a water treatment project or other project is transferred (ownership is held by a public body such as anational or local government).
*2: Water treatment projects: all or any of water supply, industrial water supply and sewerage.

Page 38 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Schedule-2 Blue Finance Guidelines Eligibility Assessment
The checklist below (BFG-1) has been prepared in accordance with the Guidelines for Blue Finance published by the International Finance Corporation (IFC) in
January 2022.
In addition to the documents reviewed, the assessment work may include cases where information obtained through consultations with funders' officials is used as
evidence.

BFG-1 Blue ProjectNo.

Contents

Requirements
CheckWork Undertaken

DNV Findings

The Blue Finance Guidance Framework includes references to Sustainable Development Goals 6 and 14, as well as other activities related to Sustainable
Development Goals 2, 12, 13 and 15, which address pollution in rivers and coastal areas. This includes activities identified through the application of thefollowing assessment criteria:
1

Is the project type consistent with the Green Bond Principles’ andGreen Loan Principles’ eligible project categories and does it make a
substantial contribution to Sustainable Development Goals 6 or 14
beyond compliance with applicable laws and regulations?

Yes

No

Not Applicable

Interviews with
METAWATER
stakeholders

Commentary;
In order to qualify as a blue project, a project must be consistent
with the project categories of Green Bond Principles and Green Loan
Principles and contribute to either Sustainable Development
Goal 6 or 14 with outputs and outcomes directly related to one ormore of the target indicators of Sustainable Development Goals.
2

Does the project type introduce risk that may affect progress onother environmental priorities, such as Sustainable Development
Goals 2, 7, 12, 13 and 15?

Confirmed documents
Framework

Yes

No

Not Applicable

Commentary;

Page 39 of 66

Confirmed documents-

Framework

DNV has confirmed that
METAWATER's eligible
projects fall under 'Sustainable
water and wastewater
management' and ‘Energy
efficiency’ as defined in theGreen Bond Principles and theGreen Loan Principles.
DNV also confirmed its
substantial contribution to
SDGs 6 and 14.
DNV confirmed that, inselecting eligible projects,
METAWATER complied withthe environmental laws andregulations required by the

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

No.

Contents

Requirements
CheckWork Undertaken

DNV Findings

The Blue Finance Guidance Framework includes references to Sustainable Development Goals 6 and 14, as well as other activities related to Sustainable
Development Goals 2, 12, 13 and 15, which address pollution in rivers and coastal areas. This includes activities identified through the application of thefollowing assessment criteria:
The project can only be labelled blue if it does not introduce material
risk to other themes and priority environmental areas of the
Sustainable Development Goals themes, including:
2: Zero hunger.
7: Affordable and Clean Energy
12: Responsible Consumption and Production
13: Climate Action

Interviews with
METAWATER
stakeholders

national and local authorities
where the project is locatedand conducted environmental
impact studies where
necessary.
No risks have been identified
at this time that could affectthe progress of otherenvironmental priorities.

Confirmed documents
Framework

DNV confirmed that
METAWATER has not
identified any significant
environmental or social risks
at this time.
DNV also confirmed that
METAWATER will apply
appropriate safeguards andstandards to address any
significant environmental andsocial risks that may emerge
in the future.

* https://www.unepfi.org/publications/turning-the-tide-recommended-exclusions/
UNEP FI, Recommended Exclusions for Financing a Sustainable Blue Economy.

3

Are Environmental, Social, and Governance (ESG) safeguards andstandards, such as the IFC Performance Standards, applied in theimplementation of the project if there are material environmental
and social risks?

Yes

No

Not Applicable

Commentary;
The project must clearly state which internationally acceptedsustainability standards it is following. IFC Performance Standards
and the World Bank Environmental, Health, and Safety guidelines, orsimilar, are expected to be followed. In addition, industry specificsustainability standards, as well as certain specific productstandards, may also be applied for a blue investment above national
requirements.
*https://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainability-at-ifc/policies-standards/performance-standards

Page 40 of 66

Interviews with
METAWATER
stakeholders

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Reference-1 Blue activity mapping(1) Enter the name of the specific project or eligibility category in the Blue Finance Area and Eligibility Category column to which the blue project applies.
(2) In the cells of the blue finance area, indicate the relevant branch number (e.g. A-1 to A-4) in black underline, based on the material in Reference-2.
*If not individually classified, they are explained individually in the column 'Others' outside the column.
Green Bond Principles and Green Loan Principles Broad Categories of Eligibility
Climate ChangeBlue Finance Area
Pollution Prevention
Natural Resource
Biodiversity
The relevant areas are underlined in black.
and Control
Protection
Mitigation
Adaptation***

A. Water Supply

Concessions,investment/Financing(A-1, A-2, A-3, A-4)***

B. Water Sanitation:

Concessions,investment/Financing(B-1, B-2, B-3)
C. Ocean-friendly and water-friendly Products(C-1, C-2, C-3)
D. Ocean-friendly Chemicals and Plastic Related Sectors:(D-1, D-2, D-3, D-4, D-5, D-6)
E. Sustainable shipping and port logistics sector(E-1, E-2, E-3, E-4, E-5, E-6)
F. Fisheries, aquaculture, and seafood value chains(F-1, F-2, F-3, F-4, F-5, F-6, F-7, F-8, F-9, F-10, F-11)
G. Marine ecosystem restoration(G-1, G-2, G-3, G-4)

Concessions,investment/Financing****

Concessions,investment/Financing

***

***

***

**

***

**

**

***

***

**

**

＊

**

I. Offshore renewable energy production
(I-1)

**
**

＊

Concessions,
Investment/Financing(H-1, H-2)

Strong impact

**

***

H. Sustainable tourism services

Other: n/a.

***

**

＊

＊

***

＊

＊

＊

＊

＊

***

How to read the table
Some impact

Minor impact

Page 41 of 66

***

**

*

Primary
or direct effects

Secondaryor indirect effects

Tertiaryor derivative effects

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Reference-2 Blue Project Detailed description
BF Area

Contents

Check

Check details(explanations & relevant documents)

A. Water supply: investment in research, design, development, and implementation of efficient and clean water supply
A-1

New drinking water treatment, storage, and sustainable supply infrastructure☒

In the concession projects, investments andfinancing, it was confirmed that there are plans
to implement water conservation in the supply
infrastructure, in developing countries such as
Vietnam.

☒

In the concession projects, investments andfinancing, it was confirmed that there is a plan toreduce power consumption by optimizing water
pumps.

☐N/A (not applicable)that documents at least 20% water savings (e.g. reducing Non-Revenue
Water) per unit of service compared to a documented baseline

A-2

Rehabilitation of existing water infrastructure that documents at least 20%
water savings per unit of service compared to a documented baseline.

A-3

More sustainable desalination plants that help protect groundwater depletion
and wetlands and avoid hypersaline pollution of the environment (e.g., ISOstandard 23446).

A-4

Water efficiency technologies and equipment and water management activities
that reduce water footprint. This includes the financing or refinancing oftechnologies (e.g. drip irrigation, water recycling solutions, etc.) where the
manufacturers show the respective substantial water efficiency benefits or adocumented reduction in water consumption in land-based aquaculture,
agriculture and irrigation, and residential, commercial, and industrial uses.

Page 42 of 66☒

In the concession projects, investments andfinancing, in addition to already achieving highwater efficiency, especially in Japan, the utilizationof renewable and unused energy and theintroduction of ICT will further improve theefficiency of water treatment.

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

BF Area

Contents

Check

Check details(explanations & relevant documents)

B. Water sanitation: investment in research, design, development, and implementation of water treatment solutions
B-1.

New or expansion of water treatment infrastructure.

☒

In the concession projects, investments andfinancing, it was confirmed that the expansion ofwater treatment infrastructure is included.

B-2

Rehabilitation or retrofit of existing water treatment infrastructure.

☒

In the concession projects, investments andfinancing, it was confirmed that the rehabilitation
or improvement of existing water treatment
infrastructure is included

B-3

Wastewater treatment plants, including industrial, agri-business, commercial,☒

In the concession projects, investments andfinancing, it was confirmed that the sewage
treatment plant is included. Effective utilizationof clean water generated soil through ICT.

residential, or city level. This also include biogas and heat exchange systems
at wastewater treatment plants to increase their efficiency and effectivenessC. Ocean-friendly and water-friendly products: investments in the value chain, including production, packaging, and distribution ofenvironmentally-friendly products that avoid water or ocean pollution.
C-1.

Research, design, manufacturing, trade, or retail of household products with asustainable supply of raw materials that can displace existing harmful products
or reduce nitrogen and phosphorus loads of the aquatic environment, including
but not limited to:• Biodegradable and phosphate-free detergents and shampoos, such as new
enzyme-based products.
• Biodegradable and phosphate-free shampoo bars, deodorant bars (such as asoap bar), and cosmetics without plastic packaging.
• Microbead-free toothpaste in non-plastic container.

Page 43 of 66☐

N/A (not applicable)

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

BF Area

C-2

Contents

Check

Research, design, manufacturing, trade, and retail of essential components of

Check details(explanations & relevant documents)☐

N/A (not applicable)☐

N/A (not applicable)

the value chain of alternative low carbon and biodegradable materials (e.g.,
Lyocell) to fossil-based fibers (e.g., polyester) used in medical, apparel, andother industries.
C-3

Research, design, manufacturing, trade, or retail of biodegradable plant-based
plastics and packaging or compostable plastics and packaging in locations
where compostable facilities are readily available.

D. Ocean-friendly chemicals and plastic-related sectors: investments in the research, design, development, and implementation of measures tomanage, reduce, recycle, and treat plastic, pollution, or chemical wastes in coastal and river basin areas.⁸
D-1.

Infrastructure that prevents runoff of agrochemicals, industrial chemicals, and☐N/A (not applicable)☐

N/A (not applicable)☐

N/A (not applicable)☐

N/A (not applicable)

mercury into areas connected to rivers or coastal water basins.
D-2

Substantial reduction per unit of product or replacement of phosphate-basedor nitrogen-based synthetic fertilizers with alternative sustainable andbiodegradable fertilizers and supplements in areas connected to rivers orcoastal water basins. ⁹

D-3.

Use of recycled or reused plastics for manufacturing in a circular economy
approach in areas connected to rivers or coastal water basins.

D-4

Plastics collection and recycling facilities, substitution of plastics packaging withsustainable and biodegradable materials, and reuse or repurpose of plastics inareas connected to rivers or coastal water basins.

Page 44 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

BF Area

D-5.

Contents

Check

Urban drainage systems that prevent plastics, chemicals, or pollutants runoff☒

In the concession projects, investments andfinancing, it was confirmed that an urban
drainage system (sewage treatment plant) thatprevents the outflow of plastics and chemicals is
included.

☐N/A (not applicable)

in areas connected to rivers or coastal water basins.¹⁰

D-6.

Flood mitigation systems that prevent plastics, chemicals, solid wastes, or

Check details(explanations & relevant documents)

pollutants runoff in areas connected to rivers or coastal water basins.¹¹
E. Sustainable shipping and port logistics sectors: investments in the research, design, development, and implementation of water and waste
management and reduction measures in shipping vessels, shipping yards and ports.10
E-1.

Investments in ballast water treatment and shipping vessels to comply with☐

N/A (not applicable)☐

N/A (not applicable)

the International Convention for the Control and Management of Ships’ Ballast
Water and Sediments (BWM Convention) to avoid spread of invasive alien
species¹² (e.g., ISO standard 11711).
E-2

Investments in membrane bioreactor type water treatment equipment andfacilities for all blackwater and greywater generated from ports and shippingand cruising vessels.

E-3

Investments in bilge water treatment in shipping vessels.

☐

N/A (not applicable)

E-4.

Investments in shipping vessels to reduce their contribution to maritime air☐

N/A (not applicable)☐

N/A (not applicable)

and noise pollution.
E-5.

Investments in improvement of oil (fuel) spill prevention, risks safeguard, andrecovery facilities.

Page 45 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

BF Area

E-6.

Contents

Check

Solid waste receiver facilities at ports and terminals for the collection of☐

Check details(explanations & relevant documents)
N/A (not applicable)

garbage.
F. Fisheries, aquaculture, and seafood value chain: sustainable production and waste management and reduction measures that meet, keep, or
exceed the Marine Stewardship Council certification standards or equivalent.
F-1

Sustainable land-based aquaculture production of high-value niche products,☐

N/A (not applicable)☐

N/A (not applicable)☐

N/A (not applicable)☐

N/A (not applicable)☐

N/A (not applicable)☐

N/A (not applicable)

such as crustaceans, sea urchins, ornamental corals, and fish.
F-2

Sustainable cultivation of bivalves for algae and nutrient removal in eutrophic
coastal waters.

F-3

Sustainable production of algae and other marine micro- or macro-organisms
to produce food, feed, pharmaceuticals, cosmetics, or other bio-based
products through bio-technological applications.

F-4.

Cold chain and storage for small- and medium-sized fishing in areas withsustainable fishing quotas.

F-5.

Medium- to large-scale processing and product development, with anemphasis on pelagic species, such as fish loins, sashimi-grade fish, andbycatch in jurisdiction with enforced sustainable fishing quotas.

F-6.

Small- to medium-scale biorefineries for fish processing by products (e.g., oil,collagen, amino acid, mineral production) in jurisdictions with enforcedsustainable fishing quotas.

Page 46 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

BF Area

F-7.

Contents

Check

Investments in fisheries to meet, keep, or exceed the Marine Stewardship

Check details(explanations & relevant documents)☐

N/A (not applicable)☐

N/A (not applicable)☐

N/A (not applicable)☐

N/A (not applicable)☐

N/A (not applicable)☐

N/A (not applicable)☐

N/A (not applicable)☐

N/A (not applicable)

Council certification standard or equivalent.
F-8

Investments in aquaculture to meet, keep, or exceed the Aquaculture
Stewardship Council certification standard or equivalent.

F-9.

Production, trade, or retail of seafood products with the blue Marine
Stewardship Council label¹³ or Aquaculture Stewardship Council label.¹⁴

F-10.

Investments for a Fishery Improvement Project¹⁵ registered at theInternational Seafood Sustainability Foundation.¹⁶

F-11.

Traceability systems to ensure sustainability of operations, facilities, andsupply chains in the fishing industry. This investment should meet, keep, or
exceed the Marine Stewardship Council certification for chain of custodycertification for suppliers of seafood products.

G. Marine ecosystem restoration.

G-1

Investments in conserving, improving, and restoring marine and coastal
ecosystems, including the support of innovative governance structures suitablefor private and public investments.

G-2

Investments in the development of ecosystems’ insurance products related to
critical aquatic ecosystems such as coral reefs, mangroves, and wetlands.

G-3

Investments in information systems, technology, and instruments deployed forPage 47 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

BF Area

Contents

Check

Check details(explanations & relevant documents)

measuring, tracking, and reporting physical and chemical indicators of thewater body to achieve sustainable fishery and aquaculture management,water-related ecosystem restoration, and disaster resilience. This could include
systems with drones, autonomous sailing vessels, autonomous underwater
vehicles, and ocean buoys, among other technologies.

G-4

Investments into promising new restoration techniques, such as artificial☐

N/A (not applicable)☐

N/A (not applicable)☐

N/A (not applicable)

habitat restoration structures using biodegradable potato starch and coral reef
restoration projects.

H. Sustainable tourism services.

H-1

Licensed certified¹⁷ sustainable tourism in the vicinity of marine conservation
areas, within less than 20 kilometers from the marine-protected areas andinternationally recognized areas (e.g., KBAs, IBAs, Ramsar Sites),¹⁸ withinclusive livelihood elements and business opportunities, such as resorts,
hotels, boat operators, sailing schools, and diving centers.

H-2

Nature-based freshwater and marine visitor centers showcasing theenvironment and disseminating research and knowledge about lakes,
wetlands, reefs, and other aquatic ecosystems.

Page 48 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

BF Area

Contents

Check

Check details(explanations & relevant documents)

I. Offshore renewable energy facilities

I-1

Offshore wind energy facilities, such as wind farms that do not harm marine☐

N/A (not applicable)

ecosystems.¹⁹ The offshore wind farm may include additional features, such as
fisheries’ sanctuaries for juveniles of certain marine species, substantial
artificial reef elements, and other additional measures promoting marine
biodiversity. 20 Offshore wind farms included in the Blue Finance Guidance
document are subject to the condition that additional elements such as nofishing zones and artificial reefs contributing to natural resource conservation
and biodiversity are added through local marine spatial planning to the project
design and that comprehensive Environmental Impact Assessment baseline
surveys are conducted over a full year in addition to regular environmental
monitoring of the area during operations. The use of proceeds cannot beallocated to the offshore oil and gas sector due to the potential contribution toa continuous lock-in to a fossil-based economy and greenhouse gas emissions.
The use of proceeds also cannot be allocated towards the marine extraction ofseabed minerals sector, as the associated activities could potentially bedamaging to ocean and marine life, which needs further assessment.
8 Coastal areas are areas that border the coastline or areas that have at least 50% of their surface within 10 kilometers from the coastline. River basin areas are
the area of land from which all surface run-off flows through a sequence of streams, rivers, and, possibly, lakes into the sea at a single river mouth, estuary, ordelta.
9 The runoff of fertilizers into oceans cause eutrophication, which is the enrichment of nutrients in an ecosystem. Excessive amounts of nutrients encourage thegrowth of algae and other aquatic plants, which in turn leads to many negative effects, such as extensive growth of algae (algae blooms) and oxygen depletion in
the sea.
10 Such urban infrastructures could locally be part of wider climate change adaptation measures.
11 Such flood mitigation infrastructures could locally be part of wider climate change adaptation measures.
Page 49 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

12 While ballast water is essential for safe and efficient modern shipping operations, it may pose serious ecological, economic, and health problems due to themultitude of marine species carried in ships’ ballast water. These include bacteria, microbes, small invertebrates, eggs, cysts, and larvae of various species. The
transferred species may survive to establish a reproductive population in the host environment, becoming invasive, competing with native species, and multiplying.
13 The blue Marine Stewardship Council label enables customers to trace products to a sustainable source. Independent surveillance audits and DNA testing provethis. The blue label represents the world’s most recognized and market-leading seafood certification program, endorsed by the Global Sustainable Seafood Initiative
and the United Nations Food and Agriculture Organization and promoted by the World Wildlife Fund.
14 Similar to the label that the Marine Stewardship Council awards, the Aquaculture Stewardship Council assigns labels for responsibly farmed aquaculture products .
15. A Fishery Improvement Project is a multi-stakeholder effort to address environmental challenges in a fishery. It utilizes the power of the private sector,
including retailers, processors, producers, and catchers, to incentivize positive changes toward sustainability in a fishery and seek to make these changes endure
through policy change. The project identifies environmental issues that need to be addressed, sets priority actions, and oversees the adopted action plan.
16 The link for the International Seafood Sustainability Foundation is https://www.iss-foundation.org/fishery-goals-and-resources/fishery-improvementprojects/fishery-improvement-projects/.
17 E.g. Tourism with an accepted certification, that includes ocean protection and water management within its audit criteria, officially licensed in accordance tolaw. This includes, but it is not limited to, the Preferred-by-Nature certification and others based on the Global Sustainable Tourism Council (GSTC) Criteria for
Hotels and Tour Operators.
18 KBAs: Key Biodiversity Areas. IBAs: Important Bird and Biodiversity Areas. Ramsar Sites: wetland sites designated to be of international importance under theRamsar Convention, also known as “The Convention on Wetlands,” an intergovernmental environmental treaty.
19 Based on their extensive experience assessing environmental risk of offshore wind power projects, some technical experts recommend to locate offshore windfarms at least 20 km from the coastline but this may change depending of the specific marine ecosystem.
20 Suitable sites must be informed by biodiversity sensitivity mapping and Strategic Environmental Assessment. Besides, no offshore wind projects will be sited in
Legally Protected Areas or Internationally Recognized Areas.

Page 50 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Schedule-3 Bonds to Finance the Sustainable Blue Economy, a Practitioner’s Guide Eligibility
Assessment
The checklist below has been prepared in accordance with Bonds to Finance the Sustainable Blue Economy, a Practitioner’s Guide published by International CapitalMarket Association (ICMA) and others in September 2023.
In addition to the documents reviewed, the assessment work may include cases where information obtained through consultations with issuer's officials is used as
evidence.

Pre-issuanceNo.

Requirements

A

Create a Bond Framework to Finance the SBE

Yes

A bond (or sometimes financing) framework is the foundation ofsustainable bond issuances. The framework is a publicly available
document that outlines how the issuer will ensure that its “bluebond” is aligned with the four core components of the Principles:

Not Applicable

(i)
(ii)
(iii)
(iv)

Requirements
Check

Use of proceeds,
Process for project evaluation and selection,
Management of proceeds, andReporting (Allocation and Impact Reporting).

No

Work Undertaken

DNV Findings

Framework

DNV has confirmed
METAWATER creates the
Framework that satisfies
following four principles of
GBP and disclose to the public.

Interviews with
METAWATER
stakeholders

(i)
(ii)

The green (blue) bond framework can also reflect how the bond isintended to contribute to global sustainability targets such as the
SDGs. The framework should describe the issuer’s overarchingsustainability objectives, policies, and strategy. Investors willconsider the bond framework when deciding to invest in a bond. The
framework is typically developed jointly with the issuer’s advisers,
including the specialized team of its lead underwriting bank as wellas environmental consultants when needed.

Page 51 of 66

Use of Proceeds.
Process for ProjectEvaluation and Selection(iii) Management ofProceeds(iv) Reporting

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

No.

Requirements

Requirements
CheckWork Undertaken

DNV Findings*Sustainable Blue Economy

B

Define and Confirm Project Categories

Yes

Eligible blue projects can cover the financing or refinancing ofinvestments and other related and supporting expenditures, as well
as physical and financial assets including bank loan portfolios.
Issuers can refer to the non-exhaustive list of eligible project
categories under the GBP. This Guidance provides additional
guidance on eligible blue project categories in Appendix 1 below.

Not Applicable

No

Framework

Environmental and social risks: The focus of green (includingblue) bonds is on the eligible projects rather than on the issuer
itself. It should nonetheless be noted that the GBP recommend thatissuers clearly communicate to investors their environmental
sustainability objectives overall, and how they identify and manage
potential environmental and social risks associated with the selected
projects. Examples of projects that should be excluded are listed inAppendix 1. Further specific detail on exclusions can be found in the
UNEP FI publication “Recommended Exclusions for Financing a
Sustainable Blue Economy.”
C

Obtain an External Review

Yes

The Principles recommend that issuers appoint (an) external review
provider(s) to assess, through a pre-issuance external review, thealignment of their green (blue) bond or green (blue) bond program
and/or framework with the four core components of the GBP. While
there are multiple types of external reviews, the most common
approach is to seek a second party opinion (SPO) on the bondframework and make it publicly available on the issuer’s website.

Not Applicable

Page 52 of 66

No

Framework
Second Party Opinion
Interviews with
METAWATER
stakeholders

DNV has confirmed thatamong METAWATER's eligible
projects, [sewerage projects]
falls under 6. Marine Pollution
a. Wastewater Management in
the SBEG Blue Project
category and subcategory.
Specifically, please refer toTable-1 of Schedule-3,
Indicative Blue Project
Categories. DNV has also
confirmed that METAWATER
has internal processes in place
to ensure that eligible projects
do not fall within a list of
distance from shore or
exclusions.

METAWATER has
commissioned DNV to conduct
a pre-issuance assessment of
the "METAWATER Blue
Finance Framework," and also
confirmed they obtainassessment by DNV if theymeet GBP four principles, andMETAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

No.

Requirements

Requirements
CheckThis is generally done by the issuer contracting an SPO provider.
SPOs are important to disclose to both potential investors and otherkey stakeholders of the company, country, or institution.

Page 53 of 66

Work Undertaken

DNV Findings

disclose second party opinion
to stakeholders.

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Table-1 Indicative Blue Project Categories
Indicative blue project categories and sub-categories(closely related to GBP category)

ClimateChangeMitigation

1. Coastal Climate Adaptation and Resilience(“Climate Change Adaptation”)
Projects that support ecological and community resilience andadaptation to climate change including using nature-based
solutions[Projects must be within 50 km of the coast or within the marine
environment]
2. Marine Ecosystem Management, Conservation, andRestoration(“Terrestrial and Aquatic Biodiversity”)
Projects that manage, conserve, and restore the health of coastal
and marine ecosystems[Projects must be within the marine environment or within 100
km of the coast]◆

ClimateChangeAdaptation

NaturalResource
Conservation

Biodiversity
Conservation

◆◆◆

◆◆

◆

◆

◆◆◆

◆◆◆

◆◆

◆◆

◆◆

◆◆

◆◆

◆◆

◆◆◆

3. Sustainable Coastal and Marine Tourism
Projects that improve the environmental sustainability of coastal
and marine tourism
4. Sustainable Marine Value Chains(“Environmentally Sustainable Management of Living
Natural Resources and Land Use”)
Projects that improve the environmental sustainability of marine
value chainsa. Sustainable marine fisheries Managementb. Sustainable aquaculture operations (algae, bivalves, fish, andseagrass).

◆

Page 54 of 66◆

Pollution
Prevention
and Control

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Indicative blue project categories and sub-categories(closely related to GBP category)

ClimateChangeMitigation

ClimateChangeAdaptation

NaturalResource
Conservation

Biodiversity
Conservation

◆

◆◆

◆◆

◆◆

Pollution
Prevention
and Control

c. Seafood supply chain sustainability
5. Marine Renewable Energy(“Renewable Energy”)
Projects that increase contribution of marine and offshore
renewable energy to energy mix and renewable energy projects
that support other SBE sectors while safeguarding the marine
environment. These include:・Offshore wind (both fixed and floating installations)
・
Wave
・
Tidal
・
Floating solar・
Ocean thermal energy conversion◆◆◆

6. Marine Pollution(“Pollution Prevention and Control” / “Sustainable Water
and Wastewater Management” / “Circular Economy Adapted
Products, Production Technologies and Processes”)
Projects that prevent, control, and reduce waste from entering
the coastal and marine environmentsa.
Wastewater management
b. Solid waste managementc.
Resource efficiency and circular economy (Waste prevention
and reduction)d. Non-point source pollution management[For wastewater management, projects must be within 100 kmof the coast.
For solid waste management, projects must be within 50 km of
the coast or a river that drains to the ocean.

◆◆Page 55 of 66

◆◆

◆◆◆

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Indicative blue project categories and sub-categories(closely related to GBP category)

ClimateChangeMitigation

ClimateChangeAdaptation

7. Sustainable Ports(“Clean Transportation”)
Projects that increase environmental performance andsustainability of port functions and infrastructure◆◆◆

8. Sustainable Marine Transport(“Clean Transportation”)
Projects that involve increasing environmental performance andsustainability of maritime transportation◆◆

NaturalResource
Conservation

Biodiversity
Conservation

Pollution
Prevention
and Control

For non-point source pollution management, projects must bewithin 200 km of the coast or within 50 km of rivers (and their
tributaries) that flow to the ocean]Symbols denote the categories' contribution to the objective.
◆◆◆：Primary◆◆：Secondary◆：Tertiary

Page 56 of 66

◆◆◆

◆

◆◆◆

◆◆◆

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Post-issuanceNo.

Requirements

DManagement of Proceeds

Yes

An essential feature of the Principles with respect to UOP bonds isthe focus on management and allocation of proceeds. It is important
to note that market practice has moved increasingly to the simpler
tracking of “equivalent amounts” of net proceeds rather than theother methods mentioned in the GBP. It is crucial to underline therecommendation for issuers to use an external auditor, or a third
party, to verify the internal tracking method and the allocation offunds derived from the net proceeds.

Not Applicable

Allocation and Impact ReportingYes

The Principles recommend annual reporting of both allocations toprojects and their expected impact. Impact reporting is alsoessential as investors want to be informed of positive outcomes of
their investments. While there is no globally accepted list of impact
metrics for SBE projects given that they span from seafood totourism and to marine protected areas, ICMA’s Harmonised
Framework for Impact Reporting nevertheless includes explicit
indicators for reporting of the impact of “blue bonds,” under several
project categories, including Biodiversity, Climate Change
Adaptation, and Living Natural Resources. Appendix 1 of this
Guidance provides a list of examples that issuers could use to reporton outputs and impacts of “blue bonds."

Not Applicable

Obtain an External Review
Post-issuance, it is recommended that an issuer’s management ofproceeds be supplemented using an external auditor, or a third party,

Yes

E

F

Check

Work Undertaken
No

No

No

Not Applicable

Page 57 of 66

DNV Findings
Not applicable as current stage
is pre-issuance Framework
Assessment.

Not applicable as current stage
is pre-issuance Framework
Assessment.

Not applicable as current stage
is pre-issuance Framework
Assessment.

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

No.

Requirements

Checkto verify the internal tracking and the allocation of funds from thegreen (blue) bond proceeds to eligible green (blue) projects.

Page 58 of 66

Work Undertaken

DNV Findings

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Appendix-1：EXCLUSIONSBlue Project Categories
1. COASTAL CLIMATE ADAPTATION &RESILIENCEEXCLUSIONS・

Grey infrastructure in ecologically sensitive areas

・

Destination development with negative environmental, social, and governance impacts withinprotected areas, critical habitat for endangered, threatened, and protected (ETP) species, orareas providing vital ecosystem services such as coastal flood defense
Involuntary displacement of local communities
Air pollution including GHG emissions
Water pollution

2. MARINE ECOSYSTEM MANAGEMENT,CONSERVATION, AND RESTORATION
3. SUSTAINABLE COASTAL AND MARINETOURISM・・・
4. SUSTAINABLE MARINE VALUE CHAINS

5. MARINE RENEWABLE ENERGY

a.
・
・
・
・

Sustainable Marine Fisheries Management
Species on the International Union for Conservation of Nature (IUCN) Red-list for Endangered,Threatened, or Protected Species (ETP)
Lack of compliance with local, national, or international laws and regulations
Destructive and illegal fishing practices
Lack of bycatch avoidance/mitigation measuresb.

Sustainable Aquaculture Operations

・・

Farm siting illegal or impacting on key ecological areas
Use of harmful chemicalsc.
・・

Seafood Supply Chain Sustainability
Labor or human rights abuses
Workforce discrimination

・・・

Located in areas with high ecological value or that endanger habitats of ETP species
Seabed disturbance and impacts
Significant noise pollution

Page 59 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Blue Project Categories

EXCLUSIONS・Air Pollution including GHG

6. MARINE POLLUTION

・・

Built-in obsolescence
Lack of compliance with policies and regulations

7. SUSTAINABLE PORTS

・・

Ports with air pollution fines
Non-compliance with the International Convention for the Prevention of Pollution from Ships(MARPOL), International Maritime Organization (IMO), national regulations, and best practicefor solid and chemical waste/runoffs from ports into sea
Evidence of oil spills and non-compliance with MARPOL, IMO, national regulations and bestpractice for oil transfer and management
Loss of critical IUCN red-listed habitats and species in the development and implementation of
the port
Building on greenfield sites

・・・
8. SUSTAINABLE MARINE TRANSPORT

・
・
・
・

Vessels running fully on fossil fuels including LNG
Vessels exceeding limit values for SOx, NOx
Companies in violation of IMO Ballast Water Treaty or lacking hull treatments against biofoulingCompanies that are not in compliance with IMO and MARPOL regulations relating to waste
disposal at sea, or that are disposing of toxic and quantifiably high levels of any waste into thesea

Page 60 of 66

Schedule-4 Green Finance Eligibility Assessment Protocol

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

GBP/GLP-1 ~ GBP/GLP-4 below are DNV's green finance eligibility assessment protocols, which are based on various criteria of the Green Bond
Principles (GBP) and Green Loan Principles (GLP).
Here, the expressions green bond and green loan are to be read as blue finance where appropriate.

GBP/GLP-1 Use of proceeds
Ref.

Criteria

Requirement

Work Undertaken

1aTypes offunds

The types of green finance are classified into one of thefollowing types defined by GBP.
· (Standard) Green Bond and Loan
・ Green Revenue Bond and Loan
・ Green Project Bond and Loan・ Other

Confirmed documents:-

DNV Findings
DNV confirmed that the green bond and loan
falls into the following category:Framework(Standard) Green Bond and Loan

1b

Green
Project
Classification

The key to a green finance is that the proceeds will be used fora green project, which should be properly stated in the legal
documents relating to the security.

Confirmed documents:
Framework
Amendment Shelf
Registration
Statement

DNV confirmed that METAWATER aims toallocate proceeds to a wide range of projects
listed in the Framework and Schedule-1.
The proceeds raised are planned to be used tofinance one or more of the potential eligible
projects. If a project has been pre-selected
before the financing is executed, this will be
disclosed in legal documents.

1c

Environment
al benefits.

All green projects to which the proceeds are used should haveclear environmental benefits, the effects of which should beassessed by the issuer and, where possible, quantitatively
demonstrated.

Confirmed documents:
Framework

DNV confirmed that the project has clear
environmental benefits which have been
evaluated by METAWATER. In water supply,
industrial water supply and sewerage, even in
Japan, where high water efficiency has alreadybeen achieved, in addition to the renewal of
facilities and operating conditions that realize

Page 61 of 66

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Ref.

Criteria

Requirement

Work Undertaken

DNV Findings
further efficiency, water treatment capacity canbe shown quantitatively.
In addition, before the financing is executed,
the evaluation method (calculation method) anditems for the environmental benefits of the
project will be disclosed, and it will bequantitatively evaluated and reported as anindex according to the characteristics of the
project in the annual report.

1d

Refinancing
rate

If all or part of the proceeds are used or may be used forrefinancing, the issuer will indicate the estimated ratio of theinitial investment to the refinancing and, if necessary.
Therefore, it is recommended to clarify which investment or
project portfolio is subject to refinancing.

Confirmed documents:
Framework

Page 62 of 66

DNV has confirmed that METAWATER intends
to use the proceeds raised as new investment,
refinancing etc. or both for one or more of thepotential eligible projects that meet the criteria
of BFG and/or SBEG. If it is known in advancewhether new investment or refinancing etc. will
be made before the financing is executed, thiswill be disclosed in the legal documents. If notyet determined, the approximate amount orpercentage of the proceeds raised that will be
used for refinancing etc. will be disclosed
through reporting (annual report).

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

GBP/GLP-2 Process for Project Evaluation and Selection
Ref.

Criteria

Requirement

Work Undertaken

2a.

Project
selection
process

Green finance fundraisers should provide an overview of theprocess of qualifying projects for which green finance funding will
be used. This includes (but is not limited to):•The process by which the issuer determines that the projectin question is included in the business category of a qualified
green project.
•
Creation of criteria for eligibility of projects for which green
bond funding will be used•
Environmental sustainability goals

Confirmed documents:
Framework

2b

Fundraiser's
Environment
al and Social
Governance
Framework

In addition to criteria and certifications, the information publishedby fundraiser regarding the green finance process also considers
the quality of performance of the fundraiser's framework andenvironmental sustainability.

Confirmed documents:
Framework

Page 63 of 66

DNV Findings
DNV confirmed that the following have been
established as the process for determining theeligibility of METAWATER's project that meet BFG
and/or SBEG by Corporate Communications Officeand Accounting and Financial Planning Officeselecting the candidates, and after consultation
with the relevant internal departments, the Headof Accounting and Financial Planning Office makes
the final decision and reports the results to theBoard of Directors for approval by the
Representative Director.
DNV confirmed that METAWATER plans to comply
with environmental laws and regulations andconduct environmental impact studies asnecessary during project selection. It also
confirmed that the company plans to implement
environmentally friendly procurement ofmaterials, response to environmentally hazardous
substances, waste management and consideration
for human rights.

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

GBP/GLP-3 Management of Proceeds
Ref.

Criteria

3a

Tracking
procedure-1

3b
Tracking
procedure-2

3c

Temporaryholding

Requirement

Work Undertaken

The net proceeds from of Green finance should be managed in
sub-accounts, included in sub-portfolio, or otherwise tracked. It
should also be certified by the fundraiser in a formal internal
process related to the fundraiser's investment and financing
operations for the Green Project.

Confirmed documents:
Framework

During the green finance redemption period, the balance offunds raised that is being tracked should be adjusted at regularintervals to match the amount allocated to eligible projects
undertaken during that period.

Confirmed documents:
Framework

If no investment or payment has been made in a qualified
green project, the fundraiser should also inform the investor of
the possible temporary investment method for the balance of
unallocated proceeds.

Confirmed documents:
Framework

Interviews with
METAWATER
stakeholders.

Interviews with
METAWATER
stakeholders.

Page 64 of 66

DNV Findings
DNV confirmed that METAWATER's Accounting
and Financial Planning Office tracks the proceeds
raised using an internal control system. DNV also
confirmed through the assessment that thesystems and documents actually used wereverified and evidenced accordingly.
DNV confirmed that METAWATER will manage
the total amount of eligible projects so that it will
not be less than the amount raised by Blue
Finance.

DNV confirmed METAWATER will explain to
investors, through the Framework and othermeans, that any unallocated proceeds will be
managed in cash and cash equivalents.

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

GBP/GLP-4 Reporting
Ref.

Criteria

4a.

Periodical
Reporting

Requirement
In addition to reporting on the use ofproceeds and the temporary
investment of unallocated proceeds,
the fundraiser will consider eachproject at least once a year for projects
to which the Green finance proceeds
have been allocated, taking into
account the following: A list of eachproject should be provided.
-Confidentiality and competitive
considerations-Outline of each project, expectedsustainable environmental and social
effects

Work Undertaken
Confirmed documents:- Framework

DNV Findings
DNV confirmed that METAWATER intends to disclose the allocation ofproceeds and impact reporting on METAWATER's website at least once a
year.
<Fund allocation status>
Amount raised
Allocation amount
Balance of unallocated proceeds and method of investment

Estimated amount or proportion of the portion of proceeds raised used
for refinancing etc.
<Impact reporting>
Eligible projects

Concession Projects
Investment andfinancing of water
treatment projects
through special
purpose companies(SPCs) to the SPCs
concerned.

Reporting items[General (water supply, industrial watersupply, sewerage)]---

Page 65 of 66

Business overview, Various water
treatment capacity
Equipment renewal, operation status
Securing safe and secure water
through strict water quality control
Strengthen monitoring andstreamline operation management
through integrated business
management
Efficient and timely renovation andrepair of facilities through active
introduction of ICT systems
Electricity usage savings
Effective use of unused energy

METAWATER Co., Ltd. Blue Finance Framework Second Party Opinion

Ref.

Criteria

Requirement

Work Undertaken

DNV Findings

Investments andFinancing
Investments andfinancing to domestic
and foreigncompanies (excluding
SPCs in concession
projects) thatspecialise in water
treatment or whose
operations are
dominated by water
treatment business.

Page 66 of 66- Overview of the investee and the
purpose of the investment or loan.
- Overview of technologies of investee
and the status of technology
introduction, etc.